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So who will foot the bill if another nuclear disaster strikes Japan?

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From left: The No. 1 to No. 4 reactors of the Fukushima No. 1 nuclear power plant in May 2012
November 1, 2018
The government is trying to wriggle out of overhauling the way compensation should be paid out for damages caused by a nuclear accident.
A working group of the government’s Atomic Energy Commission had been considering ways to bolster the system, including raising the amount of losses covered by insurance, but failed to produce a formal proposal. The commission apparently failed to obtain support for these ideas from the electric power and insurance industries.
The panel started reviewing the system in the aftermath of the 2011 Fukushima nuclear disaster.
Nearly eight years have passed since the catastrophic triple meltdown at the Fukushima No. 1 nuclear power plant, yet serious problems and flaws remain unaddressed with the current system. The government clearly has no intention of tackling them anytime soon.
The Abe administration and the power industry are pushing to restart offline reactors, which is a very irresponsible move.
The current system for compensation requires operators of nuclear plants to sign contracts with both private-sector insurers and the government to finance payouts related to nuclear accidents.
But these contracts are good for only up to 120 billion yen ($1.06 billion) per nuclear plant. This is way too small, given that compensation payments related to the Fukushima disaster have already surpassed 8 trillion yen.
In the case of Tokyo Electric Power Co., the operator of the Fukushima facility, it quickly became clear that the company could not raise the necessary funds on its own. This prospect prompted the government to create a makeshift program to support such payouts.
Under this system, the government first pays compensation and then recovers the money over a period of decades from TEPCO and other major electric utilities.
The government’s rationale is that utilities must work together to fork up funding for the system in light of the massive sums required. This system is supposed to swing into action if another major nuclear accident occurs.
But it is hard to claim that a system based on mutual aid among competitors is sustainable, given the growing competition due to the liberalization of the power retail market.
It is time to find an answer to the weighty, complicated question of how the financial burden of preparing for nuclear accidents and paying compensation for losses should be shared among electric power companies, their stakeholders and the government.
Operators of nuclear power plants have an obligation to provide against nuclear emergencies.
As a first step, insurance coverage for accident-caused losses should be sharply raised.
The government needs to continue working with related industries to work out a specific plan.
It should also consider how to deal with the prospect of a power company going under in the event of a serious accident. If such a thing were to happen, the government would probably have to play the leading role in paying compensation. But it would still need to get the shareholders and financial institutions involved to cough up their fair share of the burden.
Increased insurance premiums paid by major electric utilities could cause electricity bills to rise. But it would help make more accurate assessments of the real costs of nuclear power generation, which both the government and the power industry have claimed to be lower than those of alternative energy sources.
At the root of the troubled history of policy efforts to address the issue of compensation is the ambiguous nature of the government’s nuclear power policy. This is borne out by the way it took the initiative in promoting nuclear power plants operated by private-sector companies.
Should nuclear power generation continue despite the potential risks and social costs? If another severe nuclear accident occurs, who should take the responsibility for dealing with the aftermath and in what ways?
These are just some of the fundamental questions about nuclear power policy raised by the need to revamp the compensation system.

November 3, 2018 Posted by | Fukushima 2018 | , , | Leave a comment

Tepco’s Fukushima: the most expensive industrial accident in history



(MENAFN – Asia Times) Six years after Japan’s Fukushima nuclear accident three global nuclear corporations are fighting for their very survival.

The bankruptcy filing by Westinghouse Electric Co. and its parent company Toshiba Corp. preparing to post losses of 1 trillion (US9 billion), is a defining moment in the global decline of the nuclear power industry.

However, whereas the final financial meltdown of Westinghouse and Toshiba will likely be measured in a few tens of billions of dollars, those losses are but a fraction of what Tokyo Electric Power Co. (Tepco) is looking at as a result of the Fukushima nuclear disaster.

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If the latest estimates for the cost of cleaning up the Fukushima plant prove accurate, Tepco faces the equivalent of a Toshiba meltdown every year until 2087.

In November 2016, the Japanese Government announced a revised estimate for the Fukushima nuclear accident (decommissioning, decontamination, waste management and compensation) of 21.5 trillion (US193 billion) – a doubling of their estimate in 2013.

But the credibility of the government’s numbers have been questioned all along, given that the actual ‘decommissioning’ of the Fukushima plant and its three melted reactors is entering into an engineering unkown.

This questioning was borne out by the November doubling of cost estimates after only several years into the accident, when there is every prospect Tepco will be cleaning up Fukushima well into next century.

And sure enough, a new assessment published in early March from the Japan Institute for Economic Research, estimates that total costs for decommissioning, decontamination and compensation as a result of the Fukushima atomic disaster could range between 50-70 trillion (US449-628 billion).

If confirmed over the coming years, it will be the most expensive industrial accident in history with even greater implications for the people and energy future of Japan.

Rather than admit that the Fukushima accident is effectively the end of Tepco as a nuclear generating company, the outline of a restructuring plan was announced last week.

Tepco Holdings, the entity established to manage the destroyed nuclear site, and the Nuclear Damage Compensation and Decommissioning Facilitation Corporation (NDF) are seeking ways to sustain the utility in the years ahead, confronted as they are with escalating Fukushima costs and electricity market reform.

The NDF, originally established by the Government in 2011 to oversee compensation payments and to secure electricity supply, had its scope broadened in 2014 to oversee decommissioning of the Fukushima Daiichi plant on the Pacific Ocean coast north of Tokyo.

The latest restructuring plan is intended to find a way forward for Tepco by securing a future for its nuclear, transmission and distribution businesses. If possible in combination with other energy companies in Japan.

Map of Japan’s nuclear plants. Photo: Japan Atomic Industries Forum Inc, 2016.

But the plan, already received less than warmly by other utilities rightly concerned at being burdened with Tepco’s liabilities, is premised on Fukushima cost estimates of 21.5 trillion — not 50-70 trillion.

To date Tepco’s Fukushima costs have been covered by interest-free government loans, with 6 trillion (US57 billion) already paid out. Since 2012 Tepco’s electricity ratepayers have paid 2.4 trillion to cover nuclear-related costs, including the Fukushima accident site.

That is nothing compared to the costs looming over future decades and beyond and it comes at a time when Tepco and other electric utilities are under commercial pressure as never before.

The commercial pressure comes from electricity market reform that since April 2016 allowed consumers to switch from the monopoly utilities to independent power providers.

In the ten months to February 2017, the main electric utilities lost 2.5 million customers, with Tepco alone losing more than 1.44 million. Hence, profits have fallen off a cliff.

Prior to the deregulation of the retail electricity market, Tepco had 22 million customers. As the Tepco president observed late last year “The number (of customers leaving Tepco) is changing every day as the liberalization continues … We will of course need to think of ways to counter that competition.”

Countering that competition shouldn’t mean rigging the market, yet Tepco and the other utilities intend to try and retain their decades long dominance of electricity by retaining control over access to the grid. This is a concerted push back against the growth of renewable energy.

Current plans to open the grid to competition in 2020, so called legal unbundling, are essential to wrest control from the big utilities.

The message of unbundling and independence, however, doesn’t seem to have reached the Ministry of Economy, Trade and Industry (METI) that oversees the electricity industry.

Current plans would allow Tepco to establish separate legal entities: Tepco Fuel & Power (thermal power generation), Tepco Energy Partner (power distribution) and Tepco Power Grid (power transmission).

Tepco Holdings will retain their stock and control their management, meaning the same monopoly will retain control of the grid. Where Tepco leads, the other nine electric utilities are aiming to follow.

Leaving the grid effectively still under the control of the traditional utilities will throw up a major obstacle to large scale expansion of renewable energy sources from new companies.

Such businesses will be ‘curtailed’ or stopped from supplying electricity to the grid when the large utilities decide it’s necessary, justified for example to maintain the stability of the grid.

The fact that ‘curtailment’ will be permitted in many regions without financial compensation piles further pain onto new entrants to the electricity market, and by extension consumers.

Further, METI plans to spread the escalating costs of Fukushima so that other utilities and new power companies pay a proportion of compensation costs. METI’s justification for charging customers of new energy companies is that they benefited from nuclear power before the market opened up.

The need to find someone else to pay for Tepco’s mess is underscored by the breakdown of the Fukushima disaster cost estimate in November.

When put at 22 trillion estimate, 16 trillion is supposed to be covered by Tepco. The Ministry of Finance is to offer 2 trillion for decontamination, and the remaining 4 trillion is to be provided by other power companies and new electricity providers.

The question is how does Tepco cover its share of the costs when it’s losing customers and its only remaining nuclear plant in Japan, Kashiwazaki Kariwa (the worlds largest), has no prospect of restarting operation due to local opposition?

What happens when Fukushima costs rise to the levels projected of 50-70 trillion?

The policy measures being put in place by Tepco, other utilities and the government suggests that they know what is coming and their solution for paying for the world’s most costly industrial accident will be sticking both hands into the public purse.

Shaun Burnie is a senior nuclear specialist with Greenpeace Germany, Tokyo. He has worked on nuclear issues worldwide for more than three decades, including since 1991 on Japan’s nuclear policy.

March 31, 2017 Posted by | Fukushima 2017 | , , | Leave a comment

Fukushima Nuclear Disaster Bill to Double to $188 Billion

Fukushima nuclear disaster bill to double to 21.5 trillion yen
Total costs to resolve the 2011 Fukushima nuclear disaster will reach 21.5 trillion yen (about $188 billion), nearly double the previous estimate, which will be passed on to users in higher electricity bills.
The industry ministry said on Dec. 9 that the final tab for the accident at the crippled Fukushima No. 1 nuclear power plant is estimated to balloon from the 11 trillion yen calculated in 2013.
To prevent the plant operator, Tokyo Electric Power Co., from going bankrupt under the skyrocketing costs for decommissioning, compensation and decontamination, the government said it will increase the maximum amount of its zero-interest loans to the utility from the current 9 trillion yen to 13.5 trillion yen.
Much of the additional costs will be eventually covered by the public, as the government plans to raise electricity charges to that end.
Within the total, compensation paid to people affected by the nuclear accident will increase from 5.4 trillion yen to 7.9 trillion yen. Bills for decontaminating areas polluted with radioactive substances will rise from 2.5 trillion yen to 4 trillion yen.
The rise in compensation costs is mainly attributable to a new support measure adopted for people in the agricultural and forestry sectors who cannot restart their work due to restrictions on the shipments of their products.
The increase in decontamination costs was mainly led by the rise in prices of bags to hold contaminated materials and the larger-than-expected personnel costs of decontamination workers.
The compensation costs will be temporarily covered by the government. But TEPCO will eventually shoulder most of the burden, in principle, spending many years paying it off. Other major utilities and newly established electric power companies will also contribute in the form of a rise in electric power cable usage fees.
The Ministry of Economy, Trade and Industry also unveiled plans to increase TEPCO’s revenues to decrease the burden on the public.
The plan calls for TEPCO to increase its annual profits from the current 400 billion yen to 500 billion yen by cutting costs in the field of electricity transmission and distribution. It also expects an additional 100 billion yen through restarting the Kashiwazaki-Kariwa nuclear power plant in Niigata Prefecture.
Fukushima cleanup to cost 21.5 trillion yen, double original estimate
The cost of dealing with the aftermath of the disaster at the Fukushima No. 1 Nuclear Power Plant will reach 21.5 trillion yen, roughly double the government’s initial prediction of 11 trillion yen, preliminary calculations released on Dec. 8 by the Ministry of Economy, Trade and Industry have shown.
The government plans to have new electricity suppliers and major utilities including the plant’s operator, Tokyo Electric Power Co. (TEPCO), tack a portion of the additional costs onto power bills.
The ministry calculated that the cost of compensating people affected by the disaster would rise from 5.4 trillion yen to 7.9 trillion yen. The cost associated with decontamination and the construction of interim storage facilities for radioactive waste, meanwhile, was expected to rise from 3.6 trillion yen to 5.6 trillion yen. The ministry estimated that TEPCO would end up paying around 8 trillion yen to decommission the plant’s reactors, up from an initial estimate of 2 trillion yen.
TEPCO and other major power companies are covering the cost of compensation payments but the ministry plans to make new power producers and suppliers also pay some compensation. A ministry representative explained, “Customers of power producers and suppliers that have newly entered the market used power from major utilities in the past, and benefitted from nuclear power plants.”
Over a 40-year period beginning in 2020, new power producers and suppliers are set to add part of the additional costs of compensation payments to “wheeling charges” that they pay to use the lines of major power suppliers such as TEPCO, which will be passed onto power bills. However, new power producers and consumer groups say this runs counter to the aims of liberalization of the power market, which aims to stimulate the market with the entry of newcomers.
The ministry hopes to quieten resistance from market newcomers by having major utilities furnish them with relatively cheap power through the market, including nuclear and hydro power. Major utilities, however, are unhappy with this approach.
The cost of decommissioning the reactors at the Fukushima plant will be left in TEPCO’s hands. A system will be created to have the Nuclear Damage Compensation and Decommissioning Facilitation Corp. collect profits that TEPCO acquires through streamlining of its management, which will be paid out under government supervision.
At this stage, however, the method of decommissioning the reactors at TEPCO’s Fukushima No. 1 plant has yet to be established.
“It is difficult to accurately calculate at this stage how much it will cost to decommission the reactors,” a ministry representative commented. There are accordingly fears that the decommissioning cost could rise in the future.
The government plans to extend the amount of compensation bonds loaned to TEPCO from the current 9 trillion yen to 14 trillion yen. It is possible that this could lead to an increased burden on the public in the future.

December 10, 2016 Posted by | Fukushima 2016 | , , | Leave a comment

Loan ceiling for TEPCO to be raised


Japan’s government has decided to lift the ceiling for interest-free loans to the operator of the crippled Fukushima Daiichi nuclear power plant.
The government now estimates the facility will end up costing Tokyo Electric Power Company more than 194 billion dollars.

daichi cost 7 dec 2016.jpg


Decommissioning the plant is expected to cost 4 times the original estimate of 17 billion dollars. Compensation for farmers is expected to rise to 70 billion dollars from 47 billion dollars.
The cost of decontamination work and constructing intermediate storage facilities for contaminated soil and waste materials is also likely to increase to 53 billion dollars from 31 billion dollars.
Against this backdrop, the government plans to raise the upper limit of its loans to TEPCO from the current 79 billion dollars to 123 billion dollars.
The government plans to have TEPCO and other utilities pay back the loans. It says the utilities include newcomers to the market following deregulation of the retail power business this year.
Speculation is growing that the decision may result in higher electricity prices, which will increase the burden on consumers.

December 9, 2016 Posted by | Fukushima 2016 | , , , | Leave a comment

Fukushima Daiichi to cost TEPCO $170 billion

Japan’s government estimates the crippled Fukushima Daiichi nuclear plant will end up costing its operator more than 170 billion dollars. The figure includes the costs of decommissioning the facility, as well as compensation and decontamination work.

Tokyo Electric Power Company has said it will secure about 17 billion dollars to decommission the plant’s reactors.

However, government officials now say the total cost will be more than 4 times higher. They estimate about 70 billion dollars will be required for the work, which includes removing melted nuclear fuel and dealing with radioactive wastewater.

The costs of decontamination work and constructing intermediate storage facilities for contaminated soil and waste materials are also likely to increase.

An additional 70 billion dollars will be needed to compensate farmers seeking damages.

The government will temporarily shoulder some of the compensation costs, and seek repayment from TEPCO at a later date. Other power companies are sharing some of the burden, which means higher electricity bills for consumers.

Japan’s industry ministry is currently working on a plan to reform TEPCO’s management and divert its profits to decommissioning work. But the ballooning costs are threatening this plan. The government aims to decide by the year-end how to share the financial burden, and how the work will be done.

December 1, 2016 Posted by | Fukushima 2016 | , , | Leave a comment

Who will pay for decommissioning the Fukushima reactors?



TOKYO — Energy policy was not high on the agenda in Sunday’s upper house election in Japan, in which the ruling Liberal Democratic Party consolidated its power. But Prime Minister Shinzo Abe, the Japanese people and the country’s power companies are facing a difficult question over the fate of the future of nuclear power in Japan: who will foot the costly bill for decommissioning the crippled Fukushima Daiichi nuclear power plant?

Every visit to the site, which was devastated by a magnitude-9.0 earthquake and subsequent tsunami five years ago, shows things are moving forward. A full-face mask is no longer needed in 90% of the compound. An underground ice wall is being constructed to reduce the amount of groundwater entering the basements of the reactor buildings. But what really caught my eye this time was the cream puffs. 

Workers engaged in the cleanup effort can now buy the sweets at a convenience store that opened at the site in March. “Every day, we sell at least 50,” a clerk said. This represents a significant improvement in working conditions. In addition, last year, a large lounge and a cafeteria opened, providing the 6,000-plus workers with hot meals for the first time.

“Decommissioning is a project that will last 30 or 40 years, and we will have to pass the work on to future generations,” said Akira Ono, who stepped down as the plant’s manager at the end of June. “We must turn this place from a disaster site to a decommissioning site,” he added.

But the road ahead is fraught with obstacles. “We haven’t even started climbing the mountain, and we don’t even know how high it is,” said Naohiro Masuda, head of the decommissioning project and a managing executive officer of Tokyo Electric Power Co. Holdings, better known as Tepco, the plant’s operator. The most difficult task is going to be the removal of nuclear debris believed to be sitting inside the containment vessels after it melted through the reactor cores. No one precisely knows the current state of the debris. 

No matter how long it takes, though, we must climb this mountain. Completing the project will require determination, technology and money. The actual cost will become more clear next year, when the company determines how it is going to remove the debris. Tepco hopes to start removal in 2021.

“The overall decommissioning is estimated to cost over 10 trillion yen ($98 billion),” a government official said. But nobody mentions who will pay the bill and how. 

Currently, compensation and decontamination are being covered by the state, on Tepco’s behalf, without charging interest. Tepco and other power companies will eventually have to reimburse the government for compensation payouts through a pool of contributions. The government will recoup decontamination costs by selling the Tepco shares it owns.  

Under this program, introduced immediately after the nuclear accident so that Tepco could meet all of its compensation obligations without going bankrupt, 11 power companies that operate nuclear reactors, including Tepco, together made a general contribution of 163 billion yen in the fiscal year to March. Tepco added another 70 billion yen as a special contribution. Although general contributions are meant to create a contingency fund for any future severe accidents at the country’s electric companies, they are in reality being used to cover Fukushima-related compensation claims.

Power companies must make general contributions for decades, and the cost is passed on to consumers through higher electricity bills. But with the liberalization of Japan’s retail electricity market in April, this mechanism will become increasingly difficult to maintain. Previously, dominant power suppliers, such as Tepco, could recoup the cost by assessing a fee on users within their territories. But that may no longer be possible as government-approved rates will be abolished in a few years, making way for new suppliers to step in with cheaper rates.

July 11, 2016 Posted by | Fukushima 2016 | , , | Leave a comment